Getting The Church On A Budget

Stephen talked to his pastor about starting a budget for the church. The church has never had one and has no debt except for a mortgage. What's the best way to put the church on a written budget?

QUESTION: Stephen in Tulsa talked to his pastor about starting a budget for the church. The church has never had one and has no debt except for a mortgage. The church does use credit cards. What’s the best way to put the church on a written budget?

ANSWER: I think you should go back as many years as you can and pull their revenues and chart them so you can see if there are any trends. You need to find out if any single individual makes up more than 30% of this revenue. If you have one tither who is financially influential, that can be a danger process in a lot of ways. It doesn’t have to be, but it can be. You need to know that that’s going on. Do the same thing as best you can with their expenses, and their expenses you’re probably going to pull from the checkbook because they’ve basically been running this thing out of their hip pocket. It’s fine to do just a checkbook analysis and start to categorize the expenses going through there and develop a budget that actually represents where this money has gone every year.

This is a new thing for the staff and governance of this particular church to be told where the money is going before it leaves. They kind of do it out of their hip pocket. It needs to reflect their reality, not some reality that you brought in from the outside. Where has the money really gone for the last three years? Show them that. Categorize it into eight or 10 categories. There’s church budget software out there. There are other things you can get like other church budgets, and look at that for a model. But you need to develop what’s called a chart of accounts, and probably there’s a CPA in this church who can help you do that. It’s really a very basic accounting system—the beginnings of a basic accounting system—but it’s way overdue.

I would let the next year’s budget be a reflection of the trends of the previous three years in expenses and revenues so that it’s reality. We’re not asking them to change their personality. We’re just asking them to admit what it is. Sometimes, when you say it out loud and they look at the actual numbers, there are some things they want to change. That’ll be up to them, but basically this is us saying out loud what we did the last three years, thus what we are going to do this coming year. Then the next level of sophistication in your accounting system is to develop a PO system—a purchase order system—which says we’re not going to do any of these expenditures unless a purchase order is issued that reflects what's happening in the budget.

Let’s get a basic budget in place and be in agreement that that’s how much we’re going to spend coming up.

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